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Lagarde defends that the “jump” of inflation in Europe has already reached its maximum level

The president of the European Central Bank (ECB), Christine Lagarde, does not change her speech on inflation and insists the current pressures in the eurozone are similar to “a hump”, in which price increases may have reached maximum in November.

Lagarde defends that the "jump" of inflation in Europe has already reached its maximum level

Lagarde defends that the “jump” of inflation in Europe has already reached its maximum level

For this reason, she reiterates that the bank’s forecasts continue to point to a relaxation of inflationary tensions throughout 2022, which makes a rate hike very unlikely next year.

In an interview with Reuters, the central banker stressed that the eurozone “is definitely different from the United States”, where the chairman of the Federal Reserve, Jerome Powell, has stopped considering inflation transitory, pointing out that the inflationary profile of the euro zone “looks like a hump”, which after increasing in recent quarters will decrease throughout 2022.

“We believe that we are at the highest level of that hump,” Lagarde said, adding that the ECB it remains confident that inflation will ease throughout 2022 and move towards the central bank’s price stability target.

In this sense, the French has indicated her confidence in the effect that in the first quarter will reflect the end of the comparison with the suspension of VAT in Germany at the end of 2020, while it is also expected that other factors, such as the prices of energy, relax substantially by the end of next year.

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“We have reasons to anticipate that by the end of 2022 energy costs will have dropped substantially”, pointed out Lagarde, for whom a more positive evolution of the situation related to bottlenecks is also expected, with respect to which it November data has shown a slight improvement, although many companies indicate that it will not normalize until mid-to-late 2022.

However, the president of the ECB has stressed that the institution remains “extremely attentive to inflation.” “It is our compass to reach our destination,” she added, so the ECB will act when necessary to maintain price stability and will not hesitate to make decisions when the conditions contemplated in the entity’s future orientation have been met.

On the other hand, Lagarde has pointed out that the situation of the labor market in the euro zone does not have much to do with that of the United States, starting with the highest level of unemployment in the Old Continent, which implies that there is “slack”, with the exception of some sectors. “Except in some sectors, there is no shortage of workers, but in general there is still room. What has been called the ‘Great Resignation’ is not being observed,” he said.

On the other hand, the president of the ECB has shown her support for a future digital euro, as a tool that responds to growing demand, but without ending up with cash. Likewise, she has again warned that cryptocurrencies such as bitcoin represent highly speculative assets in which people can lose everything.

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